The Indian real estate market is set for significant growth as it enters 2024, buoyed by positive economic indicators and shifting consumer preferences. With average housing prices across major cities rising by 11% annually, there are clear signs of resilience and opportunity. The positive sentiment among homebuyers reflects strong domestic economic performance, alongside stable interest rates. Major market players are adapting to shifting demands, positioning themselves favorably for what lies ahead.
According to Colliers India, the performance of the residential sector has been remarkable. Homebuyers have remained optimistic, stemming from consistent launches and sales aligned with notable domestic economic performance. The first half of 2024 has maintained this momentum, setting the stage for what promises to be another exceptional year.
The projection for 2025 indicates continued buoyancy, particularly within the luxury and ultra-luxury segments. Badal Yagnik, CEO of Colliers India, emphasized, "2025 could be another year, wherein multiple real estate classes ride high on investor and end-user optimism." This strong demand for high-end properties shows no signs of abatement, as wealthy individuals, particularly High Net-worth Individuals (HNIs) and Non-Resident Indians (NRIs), exhibit increasing preferences for premium offerings.
One significant trend is the focus on Tier-II and III cities, where rapid urbanization and infrastructural advancement are altering the real estate narrative. With growing populations and increased infrastructural developments, cities like Mangaluru are actively attracting established developers. Poorvi Housing, for example, is breaking ground with its landmark project, Poorvi Estella, aiming to combine luxury with modern amenities to cater to burgeoning demand.
Interestingly, the Build-to-Rent (BTR) housing segment is another area ripe for exploration, driven by changes in lifestyle preferences. Modern tenants are increasingly gravitating toward professionally managed living spaces adorned with contemporary conveniences, such as fitness centers and recreational areas. This trend aligns nicely with the growing need to facilitate the influx of young professionals migrating to urban centers.
The outlook for senior living is equally promising, with projections indicating the sector could expand from USD 2-3 billion now to potentially USD 10-12 billion by 2030. The aging Indian demographic accentuates the urgency to address this market, creating lucrative opportunities for developers.
Despite affordability concerns as the housing market stabilizes, various segments are predicted to see continued growth. For example, affordable housing strategies are being embraced to balance the rising price levels, especially impacting younger homebuyers. The luxury segment, meanwhile, is likely to thrive, capturing considerable market share as consumer preferences shift.
Flex space leasing, accounting for around 20% of the Grade A space demand, has also seen increased attention, as firms continue to adapt to hybrid work models. This has led to higher allocations to flexible workspaces, especially within burgeoning tech hubs like Bengaluru, which led the office leasing market with 21.7 million square feet leased.
“The occupier preference for managed office spaces augurs well for leading operators,” notes Vimal Nadar, Senior Director at Colliers India, highlighting how operators will increasingly venture beyond Tier I cities to capture growing demand across Tier II and III cities.
The Indian real estate sector's overall health is reflected by sustained institutional interest, with investments expected to reach upwards of $5-6 billion by the end of 2024. This financial backing signals confidence across various sub-sectors, ensuring stability moving forward.
With projects like Poorvi Estella setting benchmarks for luxury housing, and the overall growth of alternative assets, the Indian real estate market appears poised to leverage its momentum well beyond 2024. The combination of increased infrastructure, urbanization, and shifting demographic needs sets the foundation for thriving real estate activity.
The substantial growth projection amid materializing demands paints the Indian real estate market as both attractive and dynamic. Policymakers and stakeholders within the industry must grasp these opportunities and navigate alongside the shifting tides of consumer preferences, ensuring sustainable growth for all parties involved.
